America's 20 Most Promising Young Companies

Forbes went hunting for small, dynamic companies with the kind of growth potential that makes venture capitalists salivate.

To sharpen our search, we teamed with The Venture Alliance, an advisory to early-stage companies. TVA has devised a rating system for young companies. Prospects were scored on a host of characteristics, among them the size of the markets they serve, the strength of their intellectual property, the extent to which founders put their own capital at risk, the experience of their management teams and their record in hitting product-development benchmarks promised to equity investors. We collected the data through a detailed survey. TVA also brought in software experts and engineers to evaluate product plans and Forbes reporters interviewed all the finalists. The highest scorers appear to have a better shot at raising capital--and thus are considered more scintillating than their peers.

No. 20: 1st Products

Company Vitals: Manufactures and sells microwavable pastries including brownie treats, cookie dough and holiday kits through Wal-Mart, Target and Winn Dixie. The dough, which contains no perishables (even the eggs are dried and powdered), can sit on store shelves or in the freezer for nine months before expiration.

Donald Johnson, Founder, 56: Launched a service that let customers dial one number for the closest pizza joint. Later joined U-Ship, which let people weigh packages and print custom labels without having to wait on line at the post office. Bought the assets of what is now 1st Products out of bankruptcy in 2004.

No. 19: Bi3 Solutions

Company Vitals: Bi3's software mines structured data (think spreadsheets and databases), as well as unstructured data like PDF files, customer service logs, e-mails, PowerPoint slides and even doctors' notes. Also integrates outside data to create graphs and reports. Charges a flat $18,000-a-month licensing fee, no matter how many users.

Co-Founders: Greg Hatfield, 39 (left); Thomas Groh, 44: Groh's 20 years in the software and systems integration field includes stints at Siemens, IBM and Whitman-Hart, where he met Hatfield, who had worked in technology for both mining and toy companies. Groh enjoys mountain biking; Hatfield prefers fishing and boating.

No. 18. Big Stage

Company Vitals: Licenses software that creates personal avatars--virtual human representations used primarily in videogames--based on two or more digital photos. Income streams include up-front fees ($50,000 to $150,000) and revenue-sharing agreements.

Co-Founders: Jon Kraft, 43 (left); Jonathan Strietzel, 29: Stanford grad Kraft was a consultant for Oracle before starting his own data-analysis software firm at age 26. Later co-founded Pandora, a free online radio site. Strietzel launched a mobile advertising company right out of high school. Later founded Stritz Studios, a branding and consulting firm.

No. 17: ServusXchange

Founded: 2005Headquarters: Pompano Beach, Fla. Industry: Software as a service Number of Employees: Six2008 Revenue: $7,000

Company Vitals: Its Web-based software lets building contractors manage their invoices, create estimates, schedule work orders and communicate with subcontractors. Price per seat: free for contractors with fewer than three users; $89 a month for larger shops.

Brian Javeline, Founder, 44: At age 22, co-wrote inventory-and-production-management software used by apparel companies Hanes and Bebe. Later launched Investment Café, maker of software that connected business owners with their bankers, lawyers and accountants; sold in 2005 to fund ServusXchange.

No. 16: Scale Computing

Company Vitals: Makes data storage systems for corporations, hospitals, schools and governments. Unlike other hardware, Scale's is expandable in increments of one-, two- and four-terabyte storage nodes (think Lego blocks), eliminating the need to overinvest in rapidly depreciating equipment. Sells through distributors, including CDW and MicroAge.

Jeff Ready, Founder, 35: Launched and sold two venture capital-backed technology firms in the last decade: Radiate, which made Internet advertising software, funded by CMGI, and spam-blocker Corvigo, backed by Sequoia. Ready sits on the boards of several early-stage technology companies.

No. 15: EEDAR

Company Vitals: Mines its proprietary database to track more than 9,000 videogames for developers, publishers, hedge funds and retailers. Estimates sales projections and offers design and buying recommendations. Charges a variety of fees, depending on the type of service.

Co-Founders: Gregory Short, 33 (left); Geoffrey Zatkin, 36: Short founded Casters Realm, a gaming information Web site, now part of Hearst. Later launched Guildz.com--a Facebook for gamers, with message boards and chat rooms. Zatkin has 10 years of game-designing experience.

No. 14: Cleanbrands

Founded: 2007Headquarters: East Providence, R.I.Industry: Textiles Number of Employees: Nine2008 Revenue: $5.6 million

Company Vitals: Makes hypoallergenic line of pillows, pillow covers and mattress covers sold at Bed Bath & Beyond, Wal-Mart and BJ's Wholesale Club.

Gary Goldberg, Founder, 39: Launched Custom Tailored Manufacturing, maker of fire-proof tents and vests for road-construction workers. Cleanbrands was born after Goldberg had to rush his 4-year-old son to the hospital for a severe allergic reaction to dust mites in his bed. Developed the Micron One fabric with researchers at the Brown University Medical School.

No. 13: Genea Energy

Company Vitals: Its Web software saves property owners money by better allowing them to tailor their energy consumption to tenant demands. Genea pockets roughly one-third of the energy savings and one-third of any extra fees charged by landlords for overtime utility usage.

Keith Voysey, Founder, 46: Started his career at Landis and Gyr, purchased by Siemens Building Technology. Later hopped to Prentiss Properties, an energy management consultancy, where he realized the power of automation control. Enjoys riding dirt bikes with his two daughters.

No. 12: Private Access

Company Vitals: Recruiting subjects for medical research typically takes six to eight months and costs $1,600 to $1,800 per patient. This company’s patented software lets patients enter their privacy directives into a database, giving researchers advance permission to contact patients and slash research costs to roughly $250 per patient. Revenue model: licensing fees paid by research institutions and foundations.

Founder: Robert Shelton, 57 (left); President: Marc Kirshbaum, 40: A lawyer by training, Kirshbaum spent six years at Experian, where he led the business information services department. Has presented on fraud and identity theft for the Federal Trade Commission. Shelton invented and patented Private's software. Serves as chairman of KS&A, a non-profit group supporting those affected by Klinefelter Syndrome, a chromosomal abnormality afflicting his 10-year-old son.

No. 11: Quality Electrodynamics

Company Vitals: Manufactures patent-protected detectors used in magnetic resonance imaging machines made by Toshiba and Siemens. The detectors measure the water distribution from the patient's body positioned in the MRI machine, then translates the information into computer images that show early-stage cancer and stroke development where the water distribution is atypical.

Hiroyuki Fujita, Founder, 43: After completing his Ph.D. in physics from Case Western Reserve University, worked for Picker International, maker of MRI and CT scanners. Next managed R&D for USA Instruments and later became director of engineering for GE Healthcare. Patented his detector design in 2005.

No. 10: Prolifiq Software

Company Vitals: Offers real-time data management (including audio and video images) for salespeople in the technology, digital media and life sciences industries. Charges annual licensing fees between $750 and $1,000 per user.

Hemingway Huynh, Founder, 32: Developed the software (originally aimed at the gaming industry) while in his senior year at the University of Portland. In 2001 got a call from General Electric to run a trial with its sales reps; Cisco signed on soon after.

No. 9: Yurtopia

Company Vitals: Manufactures and sells earbuds for audio headphones. Size selection based on digital photos of customers' ear canals. Will start selling through Best Buy in September 2009. Anticipated price: $30.

Seth Burgett, Founder, 39: Helped start Stereotaxis, maker of cardio-surgical tools, went public in 2004; later joined contact lens maker Bausch and Lomb. Inspired by the chafing of his headphones while training for a triathlon. Still trains; also enjoys barefoot water skiing.

No. 8: Auri Footwear

Company Vitals: Designs, manufacturers and sells men's shoes online, at Amazon.com and Zappos.com, and through 100 U.S. retailers, including Nordstrom.

Ori Rosenbaum, Founder, 46: Started an auto-parts retailer out of high school. Followed with a new automobile stereo equipment company. Later launched Omicron Technologies, a packaging and shipping consultancy; clients included Apple, Sony and Hewlett-Packard. Along the way spotted a need for stylish, functional men's shoes. Enjoys racing cars.

No. 7: Oversight Systems

Founded: 2003Headquarters: Atlanta, Ga.Industry: Software as a serviceNumber of Employees: 702008 Revenue: In the "eight figures" (the company won't publicly disclose the exact number)

Company Vitals: Its Web-based software acts as a virtual auditor to catch internal fraud and employee mistakes by mining data from company databases looking for anomalies. Targets large companies and government agencies. Average annual licensing fees: $150,000.

Patrick Taylor, Founder, 47: Harvard M.B.A. with mechanical engineering background. Worked for Internet Security Systems, later bought by IBM. Other stops included Oracle, Red Brick Systems and Symantec. Has five children and loves college football.

Bradford Oberwager, Founder, 39: While in business school at Wharton, raised $500,000 from friends and family to launch Acumins, a custom vitamin maker, eventually sold to Drugstore.com. Former entrepreneur-in-residence at SoftBank Venture Capital.

No. 5: Weather Trends International

Company Vitals: Uses complex statistical algorithms to forecast temperature, precipitation and snowfall by the day and season for the year ahead. Based on those predictions, it also advises companies on what to buy and when to buy it. Charges subscription fees, from $50,000 to $200,000, depending on the amount of data and scope of consulting services.

William Kirk, Founder, 42: Former captain in the U.S. Air Force with a B.S. in meteorology. Launched Weather By Design, a forecasting company, but later closed it to work for a competitor. His second attempt is backed by $4.5 million from Kodiak Venture Partners.

No. 4: Ferrate Treatment Technologies

Company Vitals: Makes a patented machine that can fit in the back of a pick-up truck and disinfect up to 20 million gallons of water per day. The Ferrator strips electrons from iron ions to make ferrate, a more potent water disinfectant than ozone and chlorine (which leave potentially harmful byproducts); ferrate also requires less energy to produce. The Ferrator makes ferrate on site, slashing transportation costs. Price: $250,000 to $1 million, depending on the job.

No. 3: iKnowWare

Company Vitals: Offers easy-to-use, customizable software that allows users access to any data, anytime, from anywhere, even via smart phones. Also sells prepackaged versions for the construction, banking, insurance, accounting and health care industries. Prices: $39, $79 or $99 per month, depending on the level of service.

Mark Spilotro, Founder, 45: Spent 15 years in the computer business, including stints at Apple and Oracle. At Cornerstone Information Systems, he developed an online-booking system used by hotels and airlines. Enjoys sailing, skiing and watching his four daughters perform in musical theater productions.

No. 2: Kerosene and a Match

Company Vitals: Makes software that trolls the Web for as yet unsearchable graphics, photos and videos. Example: Instead of searching "arm rash" on WebMD, one could take a picture of the rash and search the Web for similar images (and remedies). Revenue model: annual licensing fee of $50,000 to $500,000, based on the size of the customer and the number of users.

No. 1: Vextec

Company Vitals: Invented patented modeling software that predicts, with great accuracy, how and when components will fail--even before they're built. Customers include Cummins, BorgWarner and Lockheed Martin.

Co-Founders: Robert Tryon, 50 (left); Loren Nasser, 49 (center); Animesh Dey, 40 (right): Tryon and Dey met while getting their Ph.D.s in engineering (with specializations in metallurgy and probabilistic methods, respectively). Nasser spent 17 years at Sverdrup, a global engineering company, where he rose through the ranks of business development.